Wall Street banks
Wall Street banks

Wall Street banks slapped with $549 million fine

What To Know

  • Eleven financial institutions have collectively received fines totaling $549 million from Wall Street federal firms regulatory agencies due to their use of “off-channel” messaging apps such as WhatsApp, iMessage, Signal, and text messages for discussing trades and business matters.
  • However, these firms were found to violate federal securities laws by not maintaining or archiving a significant portion of these off-channel communications.
  • Wall Street firms incurred these penalties for opting to use messaging apps instead of approved email systems, authorized messaging platforms, or other easily archived channels.
  • Both government agencies highlighted that the issue was widespread and not limited to lower-level employees but involved individuals at various levels of authority, including supervisors and senior executives.

Eleven financial institutions have collectively received fines totaling $549 million from Wall Street federal firms regulatory agencies due to their use of “off-channel” messaging apps such as WhatsApp, iMessage, Signal, and text messages for discussing trades and business matters.

Securities laws mandate investment firms and banks to preserve communication records and ensure that business activities are conducted through authorized channels. However, these firms were found to violate federal securities laws by not maintaining or archiving a significant portion of these off-channel communications.

Wall Street firms incurred these penalties for opting to use messaging apps instead of approved email systems, authorized messaging platforms, or other easily archived channels.

Wall Street Firms Hit with $549 Million in Fines for Unauthorized Messaging App Usage

Firms penalized by the Securities and Exchange Commission (SEC) include Wells Fargo ($125 million), BNP Paribas ($35 million), SG Americas Securities ($35 million), BMO Capital Markets ($25 million), Mizuho Securities ($25 million), Houlihan Lokey Capital ($15 million), Moelis & Company ($10 million), Wedbush Securities ($10 million), and SMBC Nikko Securities America ($9 million). Additionally, the Commodity Futures Trading Commission (CFTC) imposed fines on Wells Fargo ($75 million), BNP Paribas ($75 million), Société Générale ($75 million), and Bank of Montreal ($35 million).

Sanjay Wadhwa, the SEC’s Deputy Director of Enforcement, emphasized that recordkeeping failures undermine regulatory oversight and investor interests.

Similarly, Ian McGinley, CFTC Director of Enforcement, stressed that recordkeeping and supervision requirements are vital, and non-compliance poses significant risks.

Wall Street Federal regulators noted that all firms admitted to using unapproved communication methods and agreed to the penalties.

The SEC stated that these firms acknowledged their employees’ use of personal devices for communicating about their employers’ business through various messaging platforms. However, these communications were not properly maintained or archived, violating securities laws and impeding SEC investigations.

Both government agencies highlighted that the issue was widespread and not limited to lower-level employees but involved individuals at various levels of authority, including supervisors and senior executives.

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